Pike Place Market in Seattle is a leading example of how intentional governance can help vibrant urban spaces reach their potential as platforms for innovation. John Turnbull sat down for an interview to tell us more about the market and the role of the Preservation and Development Authority (PDA) in its operation.

People outside Seattle tend to know Pike Placeas a fish market, but it offers so much more. What makes the market special?

The Pike Place Market is a beloved part of Seattle and really unlike any other place. It’s open 363 days a year and provides space for local farmers, artisan vendors, and small businesses to thrive. It offers a wide range of social services, including a food bank, a health clinic, a senior center, child care and preschool, and assisted living for the elderly. It’s also home to nearly 500 residents who live in a mix of rent-subsidized apartments, market-rate units, and luxury condos as well as a boutique hotel and a bed-and-breakfast—all within the four-block district. Our sense of place depends on the permeability of private/commercial/public spaces, and we make a great effort to ensure that the corresponding mix of activity creates space for personal interactions.

Public support has always been a key component of the market’s success. It was first established in 1907 in response to public demand for fresh produce at fair prices. Seattleites kept the market from the wrecking ball in the 1960s and 1970s and have consistently provided public funds for capital investments—even in the midst of the Great Recession.

The market’s focus on supporting local independent business and one-to-one relationships is unique enough to create both a community sense of identity—Seattle’s “soul”—and an attraction for tourists and visitors. This has been part of the market’s identity for more than a century and has continued under the PDA’s stewardship these last 40 years.

How does the market operate? Who’s in charge?

The market’s been around since the early 1900s but its current governance structure dates back to the 1970s, when the market was almost leveled in the name of urban renewal. A group called Friends of the Market formed to fight the city’s redevelopment plans and in 1971 ran a successful ballot measure campaign to save the market. That ballot measure established the Market Historic District and created the Pike Place Market Historical Commission to make decisions about future construction and capital investments.

Commissioners are appointed by the mayor, half from a list drawn up by community organizations and half from people who live, conduct business, and own property in the market district. The commission was created to keep city government from dismantling the market, so its decisions on use, design, and business management are final, not just advisory. Overturning a commission decision requires a court appeal—and even then, appeals can be based only on questions of fair process and/or failure to follow commission guidelines.

The commission reworked the urban renewal plan to preserve the architectural and social fabric of the market. To support these goals, the city created an independent Preservation and Development Authority to oversee financial operations, development, and day-to-day management of the market. The charter that established the PDA in 1973 continues to be a guiding force for us—we refer to it all the time. It defines the PDA’s specific powers and responsibilities, which include managing the properties in the Market Historic District, supporting local farmers and small-business owners, and providing social services for low-income residents and others in the market community. Funding for social services and programs is coordinated by the Pike Place Market Foundation, which is separate from the PDA.

How are decisions made?

The PDA executive director and staff handle day-to-day business operations, but most decisions concerning contracts, tenant relations, budgets, and the like are finalized by the PDA Council, a group of 12 volunteers who are appointed for four-year terms by either the mayor, the Pike Place Market Constituency, or the PDA Council itself (each appoints four councilmembers).

The charter created the PDA as a public steward for the market that’s much more nimble than a governmental agency and much more accountable to the surrounding community. The charter requires unusual transparency, including public meetings to approve any expenditures over $10,000; bond issues; donations made by the PDA; and adoption of the annual budget and capital budget. Meanwhile, new businesses, changes in business ownership, and modifications to buildings require approval from the Market Historic Commission, which has regular biweekly meetings that include time for public comment. Nothing happens behind closed doors.

How does the PDA get its funds and how is that funding deployed?

Over 60 percent of our revenue comes from commercial tenants, with residential rents, daystall rents and fees, parking fees, and incomes from various programs and investments making up the rest. This year we expect total revenues over $18 million, which is more than $1 million more than we projected for 2015.

About three-quarters of budgeted expenses come from tenant services, which include everything from maintenance and security to insurance, utilities, and property management. Another 14 percent goes to PDA management and administration, and the last 10 percent goes toward marketing and other programmatic expenses.

The charter also gives the PDA bonding authority, which we used for the first time this past year. The $26 million in bonds will pay down existing debt and finance the new MarketFront expansion that’s slated to open next year.

The PDA Council operates the market as a business, but it doesn’t make decisions strictly based on profit. We think about return on investment in terms of social benefit to the community. The council looks at a whole host of qualitative measures that aren’t easily captured by quantitative metrics. For instance, how do you measure “local pride”? That’s why we end up referring to our charter so often—and also why we encourage our constituents to use the charter guidelines to measure our results.

So through the council and the charter, we’ve created a form of community-oriented economics that keeps us accountable to our constituents and lets us reinvest earnings to provide social services and keep residential and commercial rents low.

Lots of places are looking to innovation as a way to drive sustainable economic growth. Do you see Pike Place Market as a place for innovation?

Innovation is an important aspect of what happens in the market, though it looks different from what you might see in other more tech-oriented innovation districts. We offer highly localized small business incubation that’s focused on building a strong local economy. By providing a supportive environment for new businesses and strictly limiting opportunities to new ventures that haven’t yet built a customer base, we’ve created an active laboratory for experimentation.

We have a history of providing a solid base for new businesses—especially ones that are food-related. Starbucks, Sur La Table, and a large number of specialty food businesses got their start in the market. And there are an equally large number of culinary ventures whose lead chefs look to the market as a central source of inspiration and community. We support economic growth by helping new ventures get established—which for many involves developing an international presence—while also attracting customers to spend money in our community.

Seattle has grown by leaps and bounds in recent years, thanks in large part to a vibrant tech sector. How has this affected Pike Place Market?

Over the last few years, we’ve seen some significant changes in shopping patterns. Lots of neighborhoods now have weekly farmers’ markets, and grocery stores have been moving toward a more market-like shopping experience, which has meant fewer people shopping for groceries at the market. We’re also seeing more millennials and a lot more tourists, especially in the summer.

These changes got us thinking about what the market needs to do to stay relevant. Bringing in new businesses and younger entrepreneurs is part of this strategy, as are initiatives like our pop-up Express Markets, which bring fresh produce to different locations throughout the city mid-June through September. This summer we’re starting a weekly evening market at Pike Place so that local customers can shop without having to wade through the weekend tourist crowds.

We’ll always be hyperlocal and focused on building a strong community of market patrons and vendors. That emphasis on personal connection sets the market apart—it’s something you just can’t replicate with e-commerce.